In the next day, September 22, there will be only two GST slabs that are applicable to essential goods: 5% and 18%. This change has been brought about by the government to ease the tax system. This will render such every day necessities as paneer, ghee, soap, shampoo, as well as ACs and cars, less expensive.
This was determined during the 56 th GST Council meeting. On September 3, it was announced by Finance Minister Nirmala Sitharaman. The following are the main points of information regarding the changes answered in 9 questions and answers:
Q1: What changes have been made in GST rates?
The government has announced on September 3 that the previous slabs of 5, 12, 18 and 28 have been cut down to only two slabs 5 and 18.
Moreover, tobacco, pan masala, carbonated beverages and luxury items of such like large cars, yachts and personal planes will have a special tax of 40.
Some products such as chhena, paneer, roti, chapati and paratha will be exempted. It will also be possible to apply the new rates to all goods (except tobacco) beginning September 22.
Q2: Will this change be beneficial or harmful?
The result of this transformation will be lower prices of the goods that people use on daily basis such as soap and shampoo, food products, electronics, and cars. Life and health insurance GST has also been lowered by 18 to 0. It will translate to the advantage of the consumers.
Some key examples:
- Cement tax has been cut by 28 to 18 and as such construction cost has been lowered.
- TV and AC tax were also lowered at 28 -18, thus cheaper.
- 33 vital drugs, such as against cancer and severe diseases, tax-free.
- Small cars and motorcycles of up to 350cc decreased the GST by 28 to 18.
- Three-wheeled and auto parts have been subjected to a lower tax of 18 percent as compared to 28 percent.
Example:
- Pre change: A 100 ml bottle of hair oil is cost 100 + 18 percent GST = 118.
- After change: ₹100 + 5% GST = ₹105
- Savings: ₹13
Q3: What about old stock with higher MRP?
The government has indicated that even the old stock which has higher printed MRP should be sold at a lower price considering the decreased GST. The benefit must be received by the consumers.
In the case of medicines, the NPPA (National Pharmaceutical Pricing Authority) ordered on September 12 and 13 that:
- Firms should revise MRPs of drugs, formulation and medical devices.
- The governments, dealers, retailers and state drug controllers must be provided with revised price lists.
Q4: What if shopkeepers don’t pass on the GST benefit?
A shopkeeper who fails to reduce prices thus can have his/her complaint filed by the consumers. Offenders can be fined or even jailed.
- Contact Consumer Helpline of National Consumer Agency at 1800-11-4000.
- Call CBIC GST Helpline at 1800-1200-232
- Make complaints at the National Anti-Profiteering Authority site (copy bill and name and address of shopkeeper).
Q5: Will life and health insurance premiums reduce?
Yes, GST on life and health insurance premiums has been cut to 0, as opposed to 18 percent. The GST will also be free on renewal premiums made after September 22.
Example:
- Base premium: ₹50,000
- Earlier with 18% GST: ₹59,000
- Now with 0% GST: ₹50,000
- Savings: ₹9,000
